No Small Change
by Kiko Matsing
China’s military is telling the communist bureaucrats who run the country to make things tougher on America by dumping their holdings of U.S. bonds. How foolish that would be, especially for China.
It’s hard to know what’s going through the minds of some of China’s leaders these days. The military, infuriated by the U.S. sale of $6.4 billion in arms to Taiwan, wants to dump some of China’s vast holdings of U.S. Treasury and corporate bonds on the market, a move they believe would send interest rates here spiraling upward and weaken the dollar.
By some estimates, China today has nearly $2.4 trillion in foreign exchange holdings, with roughly $1.6 trillion of that in dollar-based assets. It’s the No. 1 holder of U.S. debt in the world.